$249 Chromebook - A major turning point for laptop computing:

Posted by SpreadingSolar on October 21, 2012 03:55 pm 17

This past week Google announced their latest Chromebook at the shockingly low price of $249. This price not only includes the well designed physical hardware but also 100GB of google drive cloud storage ($120 value) and 12 free Gogo Inflight passes ($150 value). Undoubtedly this is a great deal especially for people planning to use these included services. However, after reading reactions to the announcement, I’ve been surprised at how few people appreciate the significance of Google’s long-term plan with Chrome OS.

Most Chromebook cynics say that even at $249, the new Chromebook is just a lobotomized laptop and that for $100 more you can get a fully functional laptop. However in practice, these laptops are bulky, designed with cost-cutting hardware compromises, and not powerful enough to make Windows an enjoyable experience. They’re also underpowered for many of the tasks like video or sophisticated photo editing that are cited as limitations of chrome OS. Lastly and most significantly, a Chromebook provides a better experience for the majority of tasks that these cheap windows laptops are actually used for (instant on, SSD snappiness, portability, etc). A Chromebook, when compared against a $350 laptop, is clearly a case where less is more. Yes, for $500+ you get into a range of devices that are better in most cases but this is twice the price of today’s Chromebook and cost prohibitive for the three purchasing scenarios of potential Chromebook buyers (more below).

A second critique I found was that installing Android on the same hardware would provide greater functionality to users due to the abundance of android apps and lightweight nature of the OS. I’m sure Android will scream on a cortex-A15 chip but, for most folks, Android simply isn’t optimal for tasks like email, web-browsing, and document management. The web still has a great deal of flash content and many sites (e.g. Rdio, Hulu, Amazon, etc) serve up a much better experience to a full browser as compared to a mobile device. Additionally, Android is principally a touch interface and a touch 11.6 LCD would push the chromebook well beyond its $250 price tag. Google understands these limitations of Android but more importantly, knows that Chrome OS is a long term strategy to retain essential web-based advertising revenues.

The essential nature of Chrome OS is evidenced by Google’s long term persistence in light of poor initial adoption. Google has spent the last 3 years knowingly pushing Chrome OS hardware and software that wasn’t ready for primetime. However, after dozens of 6-week cycle updates and 3 iterations of hardware, Google now has the platform, infrastructure, and hardware for broad adoption of Chromebooks. With the release of the $249 chromebook, Google has a compelling offering to google enthusiasts ("second laptop"), technically challenged folks ("no viruses or updates"), and educators ("one stop shop for all education tech needs"). The first two groups will ensure that Chromebooks sell in reasonable numbers and generate awareness among developers. The last group is a long term play to foster a relationship with students which Google hopes will "last a lifetime". In talking with teachers and reviewing Google’s education-focused marketing material (google plus = teacher/student hangouts, google docs = student collaboration tools, youtube = multimedia education resources, drive = homework storage/sharing etc) it’s clear that Google is making a huge long term push here and gaining a great deal of traction (even when a chromebook cost $449). Steve Jobs was fond of quoting Wayne Gretzky; "Skate where the puck is going, not where it's been." Chrome OS is an example of Google’s anticipation of how ubiquitous bandwidth, seamless cloud processing, and downward PC pricing points towards the inevitableness of stateless computing.

To many, today’s $249 chromebook still appears too limiting to justify the price. To me, it’s a demonstration of proper value engineering. Google’s timing with the first gadget to use the cortex-A15 processor suggests they understand this "functionality threshold" and will continue to push down pricing of future chromebooks. Even if a Chromebook isn’t there for you yet, undoubtedly the gap is closing fast. As the price of an entire chromebook approaches the price of a Window’s OS license, manufacturers of traditional laptops are going to feel a big squeeze. I anticipate the tech industry looking back at this product release as a major milestone rather than a forgettable gadget based on an irrelevant OS.